SHELL TO ACQUIRE SINGAPORE LNG MARKETER PAVILION ENERGY IN ITS BET ON GROWING DEMAND FOR NATURAL GAS

SOURCE: oil price

Shell Plc has agreed to buy liquefied natural gas (LNG) marketer Pavilion Energy Pte, the oil major's latest bet that demand for natural gas will continue to rise.

The acquisition will consolidate more assets in the hands of what is already the world's largest LNG player, at a time when demand for LNG is expanding faster than that for other fossil fuels. Major energy producers, including Shell and Chevron Corp., say natural gas will play a long-term role in the energy transition.

The transaction will involve Shell purchasing all of Pavilion's shares from Singapore state investment firm Temasek Holdings Pte, according to a statement from the Singapore firm. Temasek expects the transaction to be completed in the first quarter of 2025, but did not disclose further details. Pavilion, a unit of Temasek, markets and ships LNG in Asia and Europe, with a portfolio of around 6.5 million tonnes per year of long-term contracts. That's about a tenth of Shell's total LNG sales last year, which reached 67 million tonnes. The energy major also has stakes in multiple global LNG plants. Temasek also has a license to import fuel into Singapore and access to receiving terminals in Spain and the United Kingdom.

Shell is one of the few companies that can absorb volumes and optimize them if demand falls in one place and rises in another, Barclays Plc said in a note. Shell has the largest gas liquefaction and marketing portfolio among major energy companies, meeting nearly a fifth of global demand, according to Bloomberg Intelligence. The company expects global demand for LNG to increase by more than 50% through 2040. The acquisition will "strengthen Shell's leadership position in LNG," Zoe Yujnovich, integrated head of gas and upstream, said in a statement on Tuesday. Shell plans to grow its LNG business by up to 30% by 2030, compared to 2022, according to the statement.